The Homeland Security Department will limit the scope of union bargaining, make it easier for managers to discipline poor performers and, over the next four years, dismantle the General Schedule pay system, under new regulations to be published soon in the Federal Register. In a press briefing Wednesday morning, Homeland Secretary Tom Ridge and Office of Personnel Management Director Kay Coles James announced the completion of the regulations after nearly two years of focus group sessions, town hall meetings and deliberations with skeptical employee unions.

Ridge said that the system aims to help the department "both attract and maintain a quality workforce" by allowing top performers to win quicker and bigger raises than are permitted under the decades-old General Schedule. In addition, he said that the system will provide managers with the flexibility they need to act quickly to protect the homeland. On "many occasions where we have to move people around quickly, we don't have latitude to sit down and discuss it or bargain," he said.

Employee unions blasted the regulations and announced plans to file a lawsuit against the department. John Gage, president of the American Federation of Government Employees, said Wednesday that the system would "encourage management of coercion and intimidation." He insisted that pay-for-performance was not about rewarding top employees; he called it "a scam to reduce overall federal pay."

He predicted that tight federal budgets will prevent agency managers from investing the necessary resources to develop a credible performance evaluation process, causing the system to have the opposite effect predicted by Ridge. "It won't serve as an incentive, but as a morale buster…. It will drive away the best and brightest, not attract them."

AFGE and National Treasury Employees Union officials said that they will file their lawsuit in federal district court in Washington and ask that implementation of the new system be halted. They will argue that the regulations violate the intent of the 2002 Homeland Security Act, which both created the Homeland Security Department and authorized it to create a new personnel system.

Gage and NTEU President Colleen Kelley said the regulations violate the act by limiting collective bargaining rights. Under the terms of the new rules, DHS management will no longer bargain with unions when it makes decisions about the assignment of work, deployment of personnel and use of new technology.

In addition, the unions say that the new disciplinary rules violate employee rights by restricting the Merit Systems Protection Board, an independent federal agency that adjudicates employee appeals of agency disciplinary actions, from mitigating agency penalties. Under the new system, MSPB will continue to hear appeals from DHS employees, and may overturn them, but can only reduce an agency disciplinary penalty if the employee can show that the penalty "is so disproportionate as to be wholly unjustified."

The union leaders also said that they objected to the new pay-for-performance rules, but acknowledged that the legislation does give DHS the right to implement them. Under the new rules, DHS will conduct annual surveys of labor conditions affecting its employees in different parts of the country. Employees will be grouped in clusters by professional group, and in pay bands for trainees, journeymen, experts and supervisors. The surveys will inform pay raise decisions, in addition to managerial performance evaluations. Employees rated below "fully successful" in those evaluations will not receive raises.

The regulations provide few details about how DHS will establish the clusters, conduct the surveys, or run the mechanics of the performance reviews. They do promise that DHS will confer with employee unions as it issues management directives to implement the system, and invest heavily in training employees and managers.

The new union bargaining rules and disciplinary rules will not go into effect until after a 30-day period in which Congress will review the regulations, but no later than 180 days from now.

The General Schedule will be replaced in three phases. The first group to enter the new pay system will consist of 10,000 department headquarters staff, Information Analysis and Infrastructure Protection employees, science and technology workers, Emergency Preparedness and Response staff, and workers at the Federal Law Enforcement Training Center. They will receive their first performance-based raises in January 2007. Another 12,000 to 13,000 nonuniformed Secret Service and civilian Coast Guard employees will convert to the new pay system in January 2008. The remaining 75,000 to 80,000 workers, employees of the Customs and Border Protection, Immigration and Customs Enforcement and Citizenship and Immigration Services divisions, will follow in January 2009.

Not affected by the new rules are about 70,000 DHS employees of the Transportation Security Agency, who have their own personnel system; military service members in the Coast Guard; uniformed Secret Service officers; inspector general employees, and Emergency Preparedness & Response staff covered by the 1984 Stafford Act. All Secret Service employees will continue to operate under their current labor relations rules, and wage grade employees will not be included, at least initially, under the new pay and classification rules.

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